Plexus Holdings Releases Interim Results (UK)

Plexus Holdings plc, the AIM quoted oil and gas engineering services business and owner of the proprietary POS-GRIP® friction-grip method of wellhead engineering announces its interim results for the six months to 31 December 2012.

Highlights

Financial

· 21% increase in sales revenue to £11.3m (2011: £9.3m)

· 12% increase in EBITDA to £3.4m (2011: £3.0m)

· 18% increase in profit before tax to £1.7m (2011: £1.5m)

· 133% increase in capital investment of £3.9m (2011: £1.7m) – of which £3.1m (2011: £0.9m) was wellhead rental inventory

· 35% increase in Research and Development (‘R&D’) to £0.64m (2011: £0.47m)

Operating

· Strong forward order book for POS-GRIP rental wellhead equipment due to a number of new contracts from both existing and first time international oil and gas operators, particularly for high pressure high temperature (‘HP/HT’) applications

· Evidence of increased activity and investment levels in the North Sea, particularly in the Norwegian sector where new HP/HT customer wins with Lotos Exploration & Production Norge AS (‘Lotos’), and Lundin Norway AS (‘Lundin’), and additional purchase orders from Talisman Energy Inc. (‘Talisman’) for both HP/HT and standard pressure wells under an existing contract have been secured

· Four year multi-well follow-on contract with Brunei Shell Petroleum Sdn Bhd (‘Shell Brunei’) for the supply of HP/HT and standard pressure wellhead equipment in Brunei with an initial value of circa £2m

· Post period end:

– Contract being finalised with new customer Glencore Exploration Cameroon Ltd (‘Glencore’) for the supply of HP/HT equipment

– Two year contract extension awarded by Maersk Oil North Sea UK Limited (‘Maersk’) for the supply of HP/HT equipment, initially for one well with a value of circa £1.5m

· Joint Industry Project (‘JIP’) to develop and commercialise a new and safer POS-GRIP subsea wellhead (‘HGSS’™) continues to gain momentum and secures further industry recognition with Total E&P Recherche Developpement SAS (‘Total’) in December joining existing consulting partners ENI S.p.A, Maersk, Shell International Exploration and Production B.V. (‘Shell’), Tullow Oil plc, Wintershall, and Oil States Industries Inc.

· Growing number of initiatives within the industry in relation to the need for new and superior technology, in many instances encouraged by various regulatory pressures and the importance of ‘BAST’ (use of the best and safest available technology), where exploration and production activities are moving to more complex and hostile environments, and in particular for 20,000 psi and subsea applications

Corporate

· New subsidiaries incorporated in Singapore and Brunei in anticipation of additional opportunities in the region following the supply of rental equipment for Petronas, and winning of the four year Shell Brunei follow-on contract

· Selected to participate in the March 2013 UK Trade & Investment (‘UKTI’) high level business mission to promote deep water and subsea technologies to the Brazilian Oil and Gas sector and in particular Petrobras

· Winner of the ‘Best Oil and Gas plc’ award at the annual Stock Market Wire Awards 2013

· Bank facilities renewed in September 2012 comprising a £5m credit facility on a three year revolving basis with an additional £1m overdraft on a yearly term

· Significant increase in capital investment, R&D, and intellectual property (‘IP’)

· 13% increase in basic earnings per share to 1.65p (2011: 1.46p)

· 12.8% increase in interim dividend to 0.44p per share approved for payment on 26 April 2013 to all shareholders appearing on the register of members on the record date 12 April 2013

Plexus’ Chief Executive Ben van Bilderbeek said,

“I am delighted to report another set of excellent results for the first six months of our financial year with strong year on year performances seen in terms of revenues, margins, and profitability.

“We have continued to make substantial progress in organic sales growth, as well as in relation to a number of strategic initiatives targeting future opportunities. Such initiatives include extending our global reach with a particular focus on Asia; as well as progressing our two JIPs – the unique HP/HT Tie-Back wellhead system with Maersk and the important HGSS subsea wellhead development project in partnership with international oil and gas companies. In addition, we continue to engage with a number of regulatory bodies, including the Bureau of Safety and Environmental Enforcement (‘BSEE’) in Washington, USA, regarding the scope and need for improved wellhead standards, where there is clear evidence that higher performance and testing standards are needed and indeed demanded, and where we believe POS-GRIP friction-grip technology is uniquely able to address such trends.

“These exciting developments take place at a time when there are signs of significant industry increases in planned investment and capital expenditure programmes. This can be clearly seen in areas such as the North Sea where recent reports confirmed that capital spending will this year reach its highest level in thirty years, the Arctic where, we believe, POS-GRIP technology can offer specific advantages in terms of being able to connect and disconnect our wellheads without the use of threaded connectors; and Brazil where this month we were invited to join a high level UKTI business mission to promote deep water and subsea technologies to Brazil’s fast growing oil and gas sector, a region where Petrobras plans US$236.5 billion investment for the 2012-2016 period.

“It has become clear to us that many commercial development opportunities, in addition to the significant scope for growth in our organic exploration rental wellhead business, are all taking place at a time when the need for the highest levels of safety and operational performance is paramount. Such requirements are where our superior wellhead and metal-to-metal sealing technologies become increasingly compelling, particularly for HP/HT applications, and specifically 20,000 psi and beyond, where we believe conventional technology is being seen as increasingly inadequate. These developments can perhaps be best understood against the backdrop of regulatory pressure to pursue the use of the BAST equipment which, we believe, POS-GRIP wellheads are in relation to the conventional alternatives. For these reasons I am confident that over time our POS-GRIP wellhead equipment designs will gravitate towards becoming not just the equipment of necessity but also the natural equipment of choice. As a result I continue to remain confident in the future growth of Plexus.

“On a separate note, although awards come and go and clearly take second place to our desire to continue to grow our company and deliver increasing shareholder value, I was pleased to receive in January the “Entrepreneur of the Year 2013” award at the annual Grant Thornton Quoted Company Awards. I was even more pleased on behalf of our management team and fellow employees, whose flair, professionalism, and dedication ensure such a bright future for Plexus, to also receive in February the award for “Best Oil and Gas Plc” at the annual Stock Market Wire Awards 2013. This award recognises a publicly listed oil and gas company which balances risk and reward to generate earnings or dividend growth that in turn yield the optimal shareholder return, and I can assure our stakeholders that such efforts and successes will continue to be our priority as we pursue our goal of becoming a new global wellhead standard, whether for surface or subsea applications.

“Finally, due to the positive trading over the last six month period and strong outlook, I am delighted to announce that the directors of the Group have approved the payment of an increased interim dividend of 0.44p per share which will be paid on 26 April 2013.”

[mappress]
Press Release, March 28, 2013